By DAMIAN J. TROISE and STAN CHOE, AP Business Writers
NEW YORK (AP) – Stocks rose on Wall Street on Friday, erasing market losses earlier in the week and avoiding a second consecutive weekly decline for the S&P 500. The index rose 1.7% on Friday, and some of the biggest gains came from companies whose profits are likely to rise the most if COVID-19 vaccinations and massive U.S. government spending stimulate the economy as much as economists expect. Bank stocks were boosted by an easing of regulatory restrictions by the Federal Reserve and a continued rise in bond yields. Crude oil surged and helped to rebound energy stocks.
THIS IS A BRIEF UPDATE. AP’s previous story follows below.
NEW YORK (AP) – US stocks are higher on Friday afternoon, erasing market losses earlier in the week and putting Wall Street higher to avoid a second consecutive weekly decline.
The S&P 500 rose 0.7%, and some of the biggest gains came from companies whose profits would grow the most if COVID-19 vaccinations and massive U.S. government spending programs supported the economy as much as they did. economists predict it. The index is on track for a 0.7% rise this week after losing 0.8% last week.
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The Dow Jones Industrial Average was up 192 points, or 0.6%, at 32,811 at 3:05 p.m. EST. Most Wall Street stocks were up, but losses by some tech heavyweights helped push the Nasdaq composite down 0.1%.
Stock prices have moved in recent weeks and the momentum has often changed dramatically, sometimes hourly. Rising expectations of a supercharged economic recovery are supporting many stocks on the one hand, while worries about the possibility of rising inflation and rising interest rates drying up the market on the other. .
Last week, everything from President Joe Biden to doubling his COVID-19 vaccination target to a skyscraper-sized ship blocking one of the world’s most important channels, rocked markets .
“It’s only natural for people to look at ‘the stocks of companies that would benefit the most from a rejuvenated economy,’ said Tom Plumb, portfolio manager and chairman of Plumb Funds.” But there are times when you’re going to have a fair amount of volatility, because a rally like the one we are experiencing has never been smooth. “
Much of the recent turmoil in the stock market has been the result of movements in the bond market, where yields on Treasuries have risen sharply since last fall. Higher returns can make investors less willing to pay high prices for stocks, with companies considered the most expensive to suffer the most. Companies that ask their investors to wait many years for strong earnings growth have also been hit hard.
The 10-year Treasury yield rose to 1.67% from 1.61% Thursday night. But it’s still below what it was last week, when it rose above 1.70% and hit its highest level since before the start of the pandemic.
A report released on Friday also showed that an inflation gauge the Federal Reserve likes to use was lower last month than economists had expected. This took some of the pressure off short-term inflation concerns.
The higher yields have helped increase banks’ stocks, in part because higher interest rates allow them to make bigger profits by making loans. Financials also got a boost after the Federal Reserve announced it would soon allow banks to resume repurchasing their own shares and send larger dividends to shareholders. The Fed curtailed these measures last summer to force banks to keep cash cushions amid the coronavirus recession.
Some of Friday’s biggest gains came from energy stocks, which benefited from a $ 2.41 rise in the price of US oil to $ 60.97 a barrel. .
Marathon Oil rose 3.8% and S&P 500 energy stocks rose 1.6%.
Inventories of companies that would benefit from increased investment in infrastructure also rebounded sharply. Steelmaker Nucor climbed 7.2% for the S&P 500’s biggest gain, and miner Freeport-McMoRan was up 4.3%.
President Joe Biden is pushing for heavy spending on the country’s infrastructure, as many former presidents have done with little effect. “Whether or not it happens, the market feels like there is a higher chance of this happening,” Plumb said.
Other companies that should benefit from more widespread coroanvirus vaccinations and the U.S. government’s spending plan to save the economy have also been particularly strong. L Brands, owner of Victoria’s Secret and Bath & Body Works, gained 2.1% after raising its first-quarter profit forecast, citing increased sales as stimulus checks reach people and restrictions COVID-19 are relaxed.
Since interest rates started rising last fall, tech stocks have been caught in the crosswinds of the market the most. They were among the biggest winners at the start of the pandemic, and their high stock prices and long earnings growth trajectories have made them vulnerable to weakness when interest rates rise.
These high-growth stocks had a mixed performance on Friday. Amazon and Google’s parent company fell at least 1%, while Tesla fell 5.3%. Microsoft and Facebook were both up slightly, while Apple was down 0.8% after switching between gains and losses several times.
Shares also rose in most international markets. The indices rose 1% or more from London to Seoul.
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